Tax Type
BPOL Tax
Description
Taxicab Exceptions
Topic
Local Power to Tax
Date Issued
06-24-1997
June 24, 1997
Re: Request for Advisory Opinion: BPOL
Dear****************
This will respond to your letter transmitted by fax on June 4, 1997, requesting an advisory opinion.
The license tax is a local tax which is imposed and administered by local officials. The Code of Virginia limits the involvement of the Department of Taxation to promulgating guidelines and issuing advisory opinions. However, the department shall not be required to interpret any local ordinance.
While addressing the questions raised in your letter, this response is intended to provide advisory guidance only and does not constitute a formal or binding ruling.
FACTS
Prior to January 1, 1997, the city imposed the BPOL tax on taxicabs at a rate of ten dollars each. Beginning in 1997, the city adopted a gross receipts tax on taxicabs calculated at .36 per $100 of gross receipts. The applicable threshold for imposing the gross receipts tax is $100,000. A business located in the city leases a fleet of taxicabs to independent operators. Prior to the ordinance changes effective January 1, 1997, the flat license tax was collected from the leasing company. The foregoing changes have given rise to a number issues as to the proper administration of the tax.
OPINION
I understand that your inquiry is as follows: Is the taxicab leasing company responsible for a license based on gross receipts or is each taxicab operator responsible for reporting his own receipts? Can the real estate broker/real estate agent passthrough interpretation be applied under the facts of this and any like case? Did the city have the authority to eliminate the flat tax and begin to tax gross receipts?
I will address each of these questions below.
Responsibility for Gross Receipts Tax
In cases where taxicab drivers operate for a taxicab company, the locality may require a license of either the driver or the taxicab company but not both. Section 58.1-3703 Code of Virginia provides that a taxicab driver is exempt from imposition of the BPOL tax if the tax has been imposed on the taxicab company for which he operates. However, the foregoing code provision is not helpful in this situation where the taxicab company merely rents taxicabs which are operated by independent contractors.
In general, an individual or company is subject to licensure for each line of business in which it is engaged and at each location in the taxing jurisdiction where it has a definite place of business. Provided the taxicab leasing company merely leases its vehicles to individual taxicab operators, it would have no obligation to report or pay a license tax on the gross receipts of the individual operators. If the taxicab operators are truly independent, i.e. they collect and retain their daily earnings and have no affiliation with the leasing company other than a vehicle lease, they would each be separately licensable under the ordinance provisions imposing a gross receipts tax on taxicabs. The taxicab drivers residence would be deemed his definite place of business in this instance because taxi's are mobile and otherwise have no definite place of business. Each taxicab operator would enjoy the $100,000 threshold with respect to his gross receipts.
Since the leasing company is in the business of leasing taxicabs it would be separately licensable as a tangible personal property leasing business. This business would fall under the same repair, business and personal service classification as the taxicab operators. The gross receipts from rental of vehicles would be subject to the BPOL tax at a maximum rate of .36 per $100 rate. The definite place of business for the leasing company would be the office or location from which the company has
engaged in a continuous course of dealing for the previous 30 days. The situs for gross receipts for his business would be the definite place of business from which the taxicabs are rented.
The BPOL provisions relating to brokers and real estate sales agents are similar to the provisions for taxicab drivers and their companies in that the licensing of one entity impacts on the licensing of the other. However, the similarity between the two provisions ends there. The taxicab exemption limits a locality's authority to subject an individual taxicab to licensure if he is employed by a taxicab company that has already obtained a license. The broker/agent provision under § 58.1-3732.2 of the Code of Virginia, provides that a broker may exclude from his gross receipts commissions paid to his sales agents if the sales agent is subject to licensure. Applying the broker exclusion to comparable situations that do not involve real estate services would not be appropriate. The broker-agent exclusion is a specific and specialized exclusion which must be limited to its terms.
Elimination of Flat Tax
The BPOL tax is a local tax administered by local officials. Within the framework established by the model ordinance and the other provisions of the statute, a locality has a great deal of flexibility to impose the tax as it deems appropriate. Under the facts of this case, there is no statutory provision prohibiting the city from adopting a gross receipts tax for taxicabs in place of the flat tax scheme.
I hope that the above information will be beneficial to you. Although I believe this letter conforms with the law, it is written only for your guidance. If you have any further questions or comments, please do not hesitate to let me know.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12640D
Rulings of the Tax Commissioner